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Cash for Clunkers: Money For A New Gas Guzzler?

August 7th, 2009

Isn’t this a nice looking truck? It’s big, bold and in my view, kind of neat.  It’s a 1993 Ford F-250 with a 7.3 liter Turbo Diesel engine, 5-speed manual transmission and four-wheel drive.  I’ve had it for 16 years now, and it’s only got around 125,000 miles on it with lots of memories along the way.  It’s low miles mostly because it was stored for a few years at different times while I was deployed in the navy.  Lots of mileage and engine wear to go on it still.

The “Big Black Truck” as we call it only gets about 15 miles to the gallon of diesel fuel no matter what you do with it. And yes, it belches out black, diesel smoke when you start it… and smells to high heaven (which to an old aviator smells pretty good).  But it’s a load carrying, tow-hauling machine and I’ve driven it all over the country.  For me it was my ride… the truck I enjoyed driving to work and taking trips with.  The miles it does have on it have taken me to some pretty cool places.  I’ve towed boats for salmon fishing in the Pacific,  had it hill-climbing while camping and hunting in the rugged Cascade and Okanogan ranges in the northwest, and the same throughout the midwest. That truck has tooled through mountains in Oregon and California, high and low deserts in the southwest, and just about everywhere in between there and Missouri.  It’s a comfortable highway cruiser too, albeit a little costly these days for fuel.

93-ford-f-250-73-tdsl

 

As I grew older though, somehow that dang truck became stiffer and stiffer.  Or so it seemed. The ride is pretty rough, and the clutch on the truck is about five times as stiff as one in a passenger car.  And as nice as it is when it’s truckin’ along the interstate,  it’s plain hell to drive in traffic, shifting up and down constantly.  But that granny gear in 1st can climb a hill like you wouldn’t believe! 

It does need a little work… I should fix the loose ignition switch, maybe a new fuel filter assembly, new glow plugs and/or fuel injection pump to make starting easier and a few other odds and ends (and yes, I just finished replacing the window and side mirror on the driver’s side- grrr!).  But its only had a couple of real maintenance issues in it’s entire 16-year lifespan– the clutch gave up the ghost once and a serpentine belt broke once. 

It still starts and runs like a top- a little stiff on the roads, but that’s how they’re built.  Actually rides a lot smoother with about 5,000 pounds in the back.  But I mostly use it around the property and to hold diesel fuel in a tank in the back- otherwise it doesn’t get a whole lot of use.  The Blue Book value of this truck in good condition is between $2000 and $3000 bucks.  Less for trade-in, maybe a little more at retail.    Seems crazy since it runs so well and is such a great tow vehicle, and it’s worth a lot more than that to me. 

When the new “Cash for Clunkers” laws came up this year I thought maybe it was time to do something with it, and that I could get a decent down-payment towards a higher mileage vehicle (decent meaning $4,500 bucks to me).   After all, we’re helping the auto industry, the economy and the environment by getting these big, smoky, pollutin’ trucks off the road, right?  Lots of advertisements these days are touting how “Cash for Clunkers” is good for the country and the environment because people want higher mileage vehicles and this is the way to get them. 

I was one of those people.  Was is the operative word because as I recently found out, under the Cash for Clunkers regulations, my truck does not qualify to be traded in for any kind of vehicle except another truck (or van or SUV that gets really low mileage)!  Why?  Because it is listed as a Category 3 truck, which the lawmakers defined as a vehicle with a GVWR (Gross Vehicle Weight Rating) between 8,500 lbs and 10,000 lbs.  My nice old truck has a GVWR of 8,800 pounds.   Which means that I am only eligible for a $3,500 credit to purchase another truck, van or SUV (Category 2 or 3).

So there you have it.  Under Cash for Clunkers, infused today with another 2 Billion dollars,  if I want to take the government’s, taxpayers money- I have to purchase another vehicle with terrible gas mileage.   Now why do you suppose they wrote the laws like that?   I have no desire to spend $20,000 to $40,000 or more for another truck or SUV that’s going to get around 15 miles to the gallon, just like the one I have.   I was really thinking about a little car that would cost a third of that and get around 40 mpg. That might just have helped our family and the environment a little, right?   

Statement from President Obama after the Senate vote today:  “Now, more American consumers will have the chance to purchase newer, more fuel efficient cars and the American economy will continue to get a much-needed boost. ‘Cash for Clunkers’ has been a proven success: the initial transactions are generating a more than 50% increase in fuel economy; they are generating $700 to $1000 in annual savings for consumers in reduced gas costs alone; and they are getting the oldest, dirtiest and most air polluting trucks and SUVs off the road for good…”  

Perhaps the Cash for Clunkers program does  get a few old gas guzzlers off the road.  But I would offer to you that it’s not that significant.  The CARS program rules only include required mpg increases of from 5 to 10 miles per gallon to make most vehicles eligible for the credits.  I guess that’s something.   But in my case for example, there isn’t any required mpg increase to trade in my truck… just a requirement that I buy another gas-guzzling truck! 

In my view the program is simply a government redistribution of taxpayer’s dollars with an intent to stimulate the economy (automakers, jobs, dealers, etc) for a short while.    

Is this the smartest use of our tax dollars?   According to our legislators, right now it apparently is. Probably because the program is so popular.  I would submit that most of the people trading in cars under this program were going to do so anyway at some point (eventually I’m sure I will too).   In this case, the government is simply giving money to people to do something they would have done anyway, trying to give a boost to the economy.  

Seems to me it would be simpler if we just expanded offering incentives in the way of tax credits for vehicles with higher mileage.  That way the credits would be available to everyone.

In my case I think I’ll just hang on to my ‘ole truck for a while.  Maybe it’ll actually increase in value over time.   Besides, I’m probably helping the environment more simply by not driving it very much.

To read more about Cash for Clunkers, there’s a host of other opinions and news stories on the subject.



8 Responses to “Cash for Clunkers: Money For A New Gas Guzzler?”

  1. Sageon 07 Aug 2009 at 5:43 pm

    I have an employee whose truck developed some serious mechanical problems last week–it was an old Chevy 1500 with 250k miles and he was able to get it to the car dealer and got $4500–I was shocked to learn that they don’t have to get that much better gas and I didn’t realize if you had a truck or SUV you couldn’t trade to a smaller car. I love my truck and it’s a bit new to trade it for $4500, but I might be tempted to go for something smaller as it doesn’t look like gas will return to lower levels…

  2. Beauon 07 Aug 2009 at 6:21 pm

    Sage- It’s confusing, but read the fine print if you get a chance. And yes, the mileage increase on trucks is minimal. If your truck is a Category 2 like your employee (a Chevy 1500 or Ford F-150 is a Cat 2), then you can trade it for a passenger car, with $4500 from Uncle Sam. But the 3/4 ton trucks and above with a GVWR above 8,500 pounds (like the F-250, F-350, Chevy 2500, etc.) are the Cat 3 vehicles that can only be traded for another big vehicle. I don’t know what kind of truck you’ve got, but maybe you’re good to go!

  3. R. Shermanon 10 Aug 2009 at 11:09 am

    This program is a perfect example of the economic principle of “hidden costs.” One can say, it “helps” the economy only if one ignores the destruction of perfectly good vehicles, which also removes cheap transportation from the market and forces poor people to walk, because they can’t afford the car payments for a new vehicle.

    Oy vey.

  4. Ed Abbeyon 10 Aug 2009 at 4:22 pm

    From what I’ve read, lots of people who normally couldn’t afford a new vehicle are now trading off their paid in full clunker for a $4500 down payment and monthly payments for the next five years on a new vehicle. Normally I would hope these people choke on their payments but I know I would just end up bailing them out for the second time. It just bugs me that I made the decision to buy a fuel efficient car (the last four times) and none of them would have qualified. My twelve year old clunker worth a couple grand at most still gets 30 miles to the gallon.

    On a more serious note, I’ve read another major “hidden cost” that Randall mentions is that charities have had their car donations dry up. People have gone back and got their donated clunkers because the $4500 was more than the tax write-off.

  5. Beauon 10 Aug 2009 at 10:38 pm

    Randall- Good point, and there are many other hidden costs as well. I’ve read that used car values may rise, but especially that used car engines/parts from a couple generations of vehicles will be difficult to find. But you’re right, it only “helps” the economy in discrete areas, and is actually counterproductive in others. But hey, it’s a good deal for those who can use it!
     
    Ed- At least in a lot of cases most of those people can afford to purchase a new car in the first place, or planned for it. A strange subsidy for people with a certain level of wealth and/or debt capability. I can understand the frustration for those who have planned and driven economical cars over the years- you’ve saved a lot of money by doing so, but its awful that the shortsightedness of the manufactures and so many others leads to government fostering a “stimulus” in terms of rebates. I really think tax credits would have gone so much farther- maybe that’s why they didn’t use them.

    Lets hope the charities can still “compete” in terms of the value for those who donate cars, or that altruism and generosity take precedence!

  6. hunteron 27 Jan 2010 at 12:19 am

    Good for you! Youve got a nice truck and you saved it! That cars program is such a waste, they take perfectly fine cars and destroy them, brings a tear to my eyes.

  7. Jordanon 23 Feb 2010 at 9:38 pm

    I would NEVER EVER clunker my truck. I drive a 98 Ram 2500 Cummins diesel 5spd. I’m glad the original poster of this kept his diesel too. I love the smell of it and yeah, it smokes like a train. You would have to pry it from my cold dead hands.

  8. Beauon 23 Feb 2010 at 11:25 pm

    Hunter- Yeah, it was a strange program… what did it really accomplish!? It is a nice truck, thanks! And it’s still a good work truck for me around the place.
     
    Jordan- I am glad I kept it! (Although my clutch is currently going out…); I love the smell of diesel too… :)
     
    Thanks both of you for stopping by and commenting!

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